Category: Politics

As we discussed in May, the federal government recently raised taxes and cut spending, which invariably means a smaller deficit. This remains a basic budgetary truism that Republicans continue to resist. Indeed, last year, when top marginal rates increased on households making more than $400,000 a year, a variety of GOP lawmakers argued that this would likely cause the deficit to go up – as they saw it, higher taxes on the wealthy would slow growth, which would mean fewer jobs, which would mean fewer people paying income taxes, which would mean a larger deficit. And we now know they were wrong – again – though this will probably do nothing to shake the Beltway perception of the GOP as the “fiscally responsible” party. Let’s also note that the shrinking deficit – we’re seeing the fastest reduction since the end of World War II – is also one of the nation’s best-kept secrets. It was just last year when an independent national poll asked Americans whether they thought the deficit was increasing, decreasing, or staying about the same. Only 6 percent of the country recognized reality. That’s not a typo; it was just 6 percent. The fact remains, however, that the annual budget deficit is on track this year to have shrunk by about $900 billion since President Obama took the oath of office. Responding to the news today, a Republican spokesperson for the House Budget Committee told The Hill, “Too many families are living paycheck to paycheck, and if this report is any indication, things aren’t getting much better. We need to get spending under control, so we can build a healthy economy and expand opportunity for everyone in this country.” It’s the sort of quote that helps capture everything that’s wrong with the debate over the deficit. If the economy is struggling, the GOP argument goes, it’s imperative that Congress take capital out of the system and reduce demand. By most sane measures, that’s bonkers, but Republicans won’t let their uninterrupted streak of being completely wrong get in the way of ridiculous rhetoric.
via Budget deficit remains on track for six-year low | MSNBC.

This is, of course, great news for Sen. Ted Cruz R-Texas, who now appears to have more influence over what happens in the House than the actual House Republican leadership team.But in the meantime, John Boehner’s Speakership is turning into something of a tragedy. How many times has he put together a bill, only to be betrayed by his own followers? A Democratic source on Capitol Hill recently sent around a brutal collection of bills Boehner asked his members to support, only to see his own House GOP conference reject his appeals: a grand bargain, a debt-ceiling bill in 2011, a payroll tax extension, a transportation bill, a farm bill, one fiscal-cliff bill, another fiscal-cliff bill, another farm bill, and then yesterday. I think my source might have even missed a couple, including the collapse of Boehner’s debt-ceiling bill in February 2014.We’ll have more on this later, but for now Boehner has to be asking himself about the value of a leader with no followers. As if we needed additional evidence, he remains the Speaker In Name Only.
via Border failure rocks House GOP leadership | MSNBC.

Hawksworth titled his 2008 paper on the subject: “Dude, where’s my oil money?” We don’t have any new hospitals or roads to show for it: public sector net investment plunged from 2.5% of GDP at the start of the Thatcher era to just 0.4% of GDP by 2000. It is sometimes said that the money was ploughed into benefits for the miners and all the other workers Thatcherism chucked on the scrapheap, but that’s not what the figures show. Public sector current spending hovered around 40% of GDP from Thatcher through to the start of the banking crisis.
So where did our billions go? Hawksworth writes: “The logical answer is that the oil money enabled non-oil taxes to be kept lower.” In other words: tax cuts. When the North Sea was providing maximum income, Thatcher’s chancellor, Nigel Lawson slashed income and other direct taxes, especially for the rich. The top rate of tax came down from 60p in the pound to just 40p by 1988. He also reduced the basic rate of income tax; but the poor wouldn’t have seen much of those pounds in their pockets, as, thanks to the Tories, they were paying more VAT.
What did Thatcher’s grateful children do with their tax cuts? “They used the higher disposable income to bid up house prices,” suggests Hawskworth. For a few years, the UK enjoyed a once-in-a-lifetime windfall; and it was pocketed by the rich. The revolution begun by Thatcher and Reagan is often seen as being about competition and extending markets. But that’s to focus on the process and overlook the motivation or the result. As the historian of neoliberalism Philip Mirowski argues, what the past 30 years have been about is using the powers of the state to divert more resources to the wealthy. You see that with privatisation: the handing over of our assets at knock-down prices to corporations and supposed “investors”, who then skim off the profits. The transformation of the North Sea billions into tax cuts for the wealthy is the same process but at its most squalid.
Compare and contrast with the Norwegian experience. In 1974, Oslo laid down the principle that oil wealth should be used to develop a “qualitatively better society”, defined by historian Helge Ryggvik as “greater equality”. Ten oil commandments were set down to ensure the industry was put under democratic control – which it remains to this day, with the public owning nearly 70% of the oil company and the fields. It’s a glimpse of what Britain could have had, had it been governed by something more imaginative and less rapacious than Thatcherism.
via Dude, where’s my North Sea oil money? | Aditya Chakrabortty | Comment is free | The Guardian.